Maintaining the bipartisan tone adopted since his election victory, President
Barack Obama
says he is open to ideas from the Republicans on how to increase tax revenue.

But he said his priority was to extend the “Bush tax cuts" for the 98 per cent of households earning less than $US250,000.

In his first press conference since winning re-election, Mr Obama said this measure alone would avert nearly half the impact of the so-called “fiscal cliff" before the end of year and keep the economy growing.

Economists say going over the “cliff" – a mix of tax increases and spending cuts totalling about 5 per cent of gross domestic product next year – would cause a recession.

At its October meeting, several members of the Federal Reserve’s board expressed concern about fiscal policy and favoured expanding QE3 – the current bond-buying program – to include Treasury notes at the end of the year, Fed minutes said.

US stocks have fallen on four of six trading days since election day, partly reflecting fears about the fiscal cliff. Expectations for US growth next year range from 2 per cent to 3 per cent because of uncertainty over how big an injection resolving the fiscal cliff would give the economy.

Mr Obama said he was open to reforms such as closing loopholes to raise more revenues from the top 2 per cent, but doubted Republican claims there was enough revenue there to offset the near $US1 trillion cost of extending tax cuts for those households.

“It’s very difficult to see how you make up that trillion dollars – if we’re serious about deficit reduction – just by closing loopholes and deductions."

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The President said reform of federal health care and social security entitlements had to be part of any long-term budget repair deal.

“I believe that we have to continue to take a serious look at how we reform our entitlements, because health-care costs continue to be the biggest driver of our deficits," he said.

Labor unions and progressive groups say Mr Obama should just raise taxes and leave healthcare and social security alone.

The President said he believed Democrats and Republicans could come together to avert the fiscal cliff, but both sides would have to compromise.

After extending tax cuts for middle- income households, “we can then set up a structure whereby we are dealing with tax reform, closing deductions, closing loopholes, simplifying, dealing with entitlements", he said.

Apart from the fiscal cliff issue, Mr Obama outlined a list of goals – including action on immigration reform, Iran, Syria and Benghazi.